Thursday, June 21, 2012

All homeowners who believe they have claims against one of the entities
listed on EXHIBIT “A” qualify to participate in the motion to appoint a
committee. There is no cost
to any participant and if the committee motion is granted the debtor in this
case, Residential Capital and subsidiaries will pay for the committee expenses
pursuant to 11 U.S.C. § 503(b)(4).

Claimants
that have lawsuits pending have standing to participate in this motion. Further
homeowners who
believe that they have claims, including illegal foreclosure, but do not have a
lawsuit pending may still qualify. For more details click here.

"Just saved a soldier's house from
foreclosure in a pro bono case I am handling through the NY Guard. She got a
loan mod of 2% for 5 years and then 4% for the life of the loan - down from her
original rate of 9.75%. Her payments dropped almost $600 a month and the bank
gave her a principal reduction of over $10,000."

Robert Brown, a consumer attorney based in New York will bring the motion for an Official Borrower Committee in the Residential Capital, LLC bankruptcy case. He has experience in lender liability litigation and bankruptcy practice.

All homeowners who believe they have claims against one of the entities listed on EXHIBIT “A” qualify to participate in the motion to appoint a Borrower Committee. There is no cost to any participant (homeowner) and if the committee motion is granted the debtor in this case, Residential Capital and subsidiaries will pay for the committee expenses pursuant to 11 U.S.C. § 503(b)(4).

Claimants that have lawsuits pending have standing to participate in this motion. Furthermore, homeowners who believe that they have claims, including illegal foreclosure, but do not have a lawsuit pending may still qualify.

Time is of the essence as events are already unfolding which may affect borrower rights. Those events include an $8.7 billion settlement couched as a claim, wherein ResCap and Ally will agree not to challenge repurchase claims with large institutional creditors.Another important issue is the bankruptcy may release Residential Capital, LLC and Ally Financial Inc. from the nationwide loan-servicing and foreclosure settlement.

Bankruptcy law allows for formation of Official Committees in a chapter 11 bankruptcy cases to represent various classes of claimants.In lender bankruptcies it is typical that Indenture Trustees, insurers and large bank claims dominate the committee for the unsecured creditors.The borrowers are included under this committee. Understandably this creates conflicts of interest if the borrower claim is directly against not only the bankrupt entity, but may also be against a Trustee, insurer or bank seated on the committee.

In the American Home Mortgage bankruptcy case, the judge determined that inherent conflicts of interest existed and appointed a separate committee to represent only borrowers. This was the only lender bankruptcy case to date where this occurred. Paula Rush was the driving force behind that committee, served as Chairperson of that Committee, and she will be assisting Robert Brown in the formation of a committee in this case.You may reach Paula to answer any questions you may have at 443-676-3509.

To begin, you only agree to have your client’s name included on the motion for appointment

of the committee and prepare a paragraph of background relating to the violations asserted resulting in a claim to be included in the motion.A hearing will be scheduled for the motion and you may attend the hearing, but you do not have to attend.The attorney bringing the motion will argue it before the court on behalf of all participants on the motion.

After the committee motion is granted, the U.S. Trustee will send out questionnaires to ask if you would like to serve on the committee.You do not have to serve on the committee as it is voluntary.Anyone can serve on the committee regardless of what state you are in. Meetings are held via conference calls to discuss what actions the committee will take as the bankruptcy progresses.

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